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Potential Canadian investors must approach Myanmar with caution as well as ardour

Mynamar's financial capital has a rather modest skyline for a city of six million people. But great plans are afoot to transform the city and the deeply impoverished nation's economy through foreign investment after nearly have a century of isolation.
Canadians in Myanmar are bullish about the resource-rich country's prospects but all caution that investors must be vigilant and patient because many problems remain.
Photo: Matthew Fisher/Postmedia News

YANGON, Myanmar — There are perils aplenty for prospective investors but after nearly half a century of isolation under a notoriously harsh military junta, this fabulously fertile land has suddenly become one of the hottest/coolest places to be on the planet.

Canada’s foreign minister, John Baird, was in Myanmar in March. Canada’s top salesman, International Trade Minister Ed Fast was there soon after that.

U.S. President Barack Obama came calling last week. A Canadian trade commissioner will be on the ground early in the New Year. There are rumours that Prime Minister Stephen Harper might make it to Myanmar next June when Canada’s cash-strapped foreign service opens a new embassy here.

The extravagant, irresistible buzz generated by as yet modest political reforms and by the release from house arrest of Aung Sun Suu Kyi, the much admired opposition leader, is easy to spot at the Yangon airport — where there are a dozen or more new daily flights from neighbouring countries and non-stop flights from Qatar and Germany — and in the lobbies of the city’s few decent hotels which are packed with would-be deal makers from Europe and the U.S.

Canadians have been kicking the tires, too, including Toronto-based Manulife Financial Corp. The insurance provider has made no secret that it regards Asia’s emerging markets as key to its future growth and that Myanmar is near the top of its wish list.

But the smartly dressed westerners are out-numbered at least 10-to-one by Chinese businessmen with much longer Myanmar associations. Also in the mix are swarms of Japanese, Koreans and Thai traders.

What draws the visitors is Myanmar’s largely untouched oil, gas and mineral reserves, gems such as jade, timber such as teak and a pool of 64 million impoverished but eager prospective consumers. Stoking the foreigner ardour is a new foreign investment law and an easing of rules for the incorporation of foreign companies.

“It is like a gold rush,” said Albertan Chandler Vandergrift, whose Bangkok-based company, Access Asia, consults for half a dozen energy and mining multinationals. However, Vandergrift, who specializes in due diligence, security and business risk assessment, counsels that the lessons of the Klondike were still relevant today in Myanmar. “Of every 100 men who went to the Yukon, 95 came back dirt poor, one found gold and four made money by providing him with services.”

It is a sentiment shared by Torontonian Bo Colomby who came to Myanmar in 1989 as a boat builder and now runs South Asian Nautical Explorations Ltd., a marine consultancy with clients such as the United Nations.

“This is not a place for a quick buck and it is necessary to be cautious,” said Colomby, who is fluent in Myanmarese. Myanmar was still in “the Twilight Zone” as regards infrastructure. More problematic were Burmese attitudes concerning foreign business.

“There is not much trust,” he said. “There is also no capitalistic idea of letting those invest reap fast profits. It is looked at as ripping off the country.”

The Harper government dreams of an Asian bonanza, but as in many other places in Asia, Canada has almost no profile in Myanmar. Part of that has to do with the fact that Canada, like the US, is only now unwinding sanctions against the country that were introduced in the mid-90s to protest the generals’ human rights policies.

Nevertheless, as Myanmar opens to the world Canada has a lot to offer politically and economically. It would be a good fit with Myanmar in many areas including jurisprudence, education, transport, energy, mining and critical infrastructure such as pipelines, power grids and ports.

That Ottawa and some Canadian businessmen wish to secure a place for Canada in Myanmar is understandable. But they must not be so bewitched that they forget that this is a place where the worst scourges and pitfalls of the Third World converge.

There is rampant corruption or “tea money,” as it is called in local parlance. The system is highly dysfunctional because of an extreme lack of capacity in government caused because there are not nearly enough well-trained bureaucrats. There is an extreme shortage of technically proficient workers. Some resource-rich parts of the country that are of great interest to Canadians are still under the sway of rogue generals and ethnic armies.

Small wonder, then, that those Canadians that come “have to be comfortable working in a high risk, potential high reward environment,” said Vandergrift.

“If Canadians want to explore investment opportunities overseas, there are a lot easier places than Myanmar. It is a volatile environment and you have to be careful who you invest with,” said David Gelfer, a McGill graduate in international development who works for a consultancy in Yangon and is co-founder of the Network of Canadians in Myanmar.

Nevertheless Gelfer believes Baird and the Harper government are serious about Myanmar “at the exact moment when this is an exciting place to be” and that Canada and Burma can both benefit from the relationship.

Still, despite encouraging democratic trends and progress on human rights, Myanmar’s political situation remains fluid and locals remain nervous about what may lie ahead. Canadian investors who are “serious, long-term thinkers” were needed, but they must be patient and wait to “see which way the wind blows,” before committing themselves, Colomby said.

David Gelfer, is a McGill graduate in international development who works for a consultancy in Yangon and is co-founder of the Network of Canadians in Myanmar.

Postmedia's international affairs columnist is Canada's longest serving foreign correspondent. He has lived abroad for 30 years in Europe, the Middle East, Far East and, most recently, Afghanistan. His... read more work has taken him to 155 countries, all U.S. states, Canadian provinces and territories and the Magnetic North Pole. Professional interests include international relations, security issues, conflict zones and the Arctic. Personal enthusiasms include military histories, historical novels, hockey, baseball, fishing for pickerel and travel by train or ship to anywhere.View author's profile